Family owned firms are yet to prioritise their stakeholders’ communication needs and business expectations, according to accounting firm PwC
Its recent global Family Business Survey notes the businesses are still stuck to the traditional formula of building trust.
This is despite stakeholders' adopting new ways of information consumption and development of different expectations of businesses towards building trust.
“It is time they reconsider and adopt new, most recent formula of building trust,” PwC says.
Michael Mugasa, a Partner at PwC Kenya, said issues like Environmental, Governance and Social (ESG) and Diversity, Equity and Inclusion (DEI) are increasingly becoming barometers for measuring business.
“Family businesses will need to do a better job of communicating and increasing the visibility of their efforts around these new measures of trust,” Mugasa said.
He added that transparency and accountability is also key to winning the trust of key stakeholders.
According to PwC, there is a strong correlation between trust and profitability, hence family businesses need to focus on current market priorities to keep afloat and grow towards their legacies.
“There’s a new formula for building trust, and family businesses will need to transform to ensure they remain trusted by customers, employees and family members,” PwC says.
The report notes that East Africa's trust level in businesses are slightly higher than the global rates, with most family businesses in the region believing that it is essential to be trusted by customers, employees and family members.
However, only 56 and 47 per cent believe they are fully trusted by their customers and employees respectively.
Nevertheless, the survey ascertains that being trusted by suppliers is seen as more essential than being trusted by family members.
The firm projects growth aims by family businesses in the region as fairly ambitious over the next two years, with 75 per cent of them expecting to see growth.
In addition, the firm says 84 per cent of East African family businesses claim to have a clear company purpose but many do not take action to ensure that it is effective.
It identifies concerns about expanding into new markets and increasing customer loyalty, as key challenges that will be facing the businesses over the next two years.
The survey involved over 2,000 participants in 82 territories, 95 of whom were from East Africa.
